20 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Cross-Culture ComparisonsHight-Context (V.S) Low-Context CulturesDeal-Orientated (V.S) Relationship – Orientated Cultures
21 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 High- and Low-Context Cultures (Hall)Low-context cultures rely on explicit explanations, with emphasis on spoken words. Such cultures emphasize clear, efficient, logical delivery of verbal messages. Communication is direct. Agreements are concluded with specific, legal contractsHigh-context cultures emphasize nonverbal or indirect language. Communication aims to promote smooth, harmonious relationships. Such cultures prefer a polite, “face-saving” style that emphasizes a mutual sense of care and respect for others. Care is taken not to embarrass or offend others.Low-context cultures rely on elaborate verbal explanations, putting great emphasis on spoken words. The low-context countries tend to be in northern Europe and North America, which have long traditions of rhetoric and place central importance on delivering verbal messages. Communication is direct and explicit, and meaning is straightforward. These cultures use specific, legalistic contracts to conclude agreements.By contrast, high-context cultures such as Japan and China emphasize nonverbal messages and view communication as a means to promote smooth, harmonious relationships. They prefer an indirect and polite face-saving style that emphasizes a mutual sense of care and respect for others. This helps explain why Japanese people hesitate to say “no” when expressing disagreement. They are more likely to say “it is different,” an ambiguous response. In East Asian cultures, showing impatience, frustration, irritation, or anger disrupts harmony and is considered rude and offensive. Asians tend to be soft-spoken, and people are typically sensitive to context and nonverbal cues (body language). To succeed in Asian cultures, it is critical to have a keen eye for nonverbal signs and body language. Negotiations tend to be slow and ritualistic, and agreement is founded on trust.
22 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 High- & Low-Context Cultures
23 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Deal vs. Relationship OrientationIn deal-oriented cultures, managers focus on the task at hand, are impersonal, typically use contracts, and want to just “get down to business.” Examples are Australia, Northern Europe, and North AmericaIn relationship-oriented cultures, managers value affiliations with people, rapport, and getting to know the other party in business interactions. Relationships are more important than individual deals, and trust is valued highly in business agreements. Examples are China, Japan, and Latin American countries. It took nine years for Volkswagen to negotiate a car factory in China
25 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Hofstede’s Typology of National CulturePower distance describes how a society deals with inequalities in power that exist among peopleHigh power distance societies exhibit big gaps between the weak & powerful. In firms, top management tends to be autocratic, giving little autonomy to lower-level employees. Examples: Guatemala, Malaysia, Philippines, and several Middle Eastern countriesLow-power distance societies have small gaps between the weak and the powerful. Firms tend toward flat organizational structures, with relatively equal relations between managers & workers. For example, Scandinavian countries have instituted various systems to ensure socioeconomic equality
26 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Typology of National CultureIndividualism vs. collectivism refers to whether a culture focuses primarily on individuals or whether it values group membershipIn individualistic societies, there is great emphasis on self- interest; competition for resources is the norm; and individuals who compete best are rewarded. Examples: Australia, Britain, Canada, and the U.SIn collectivist societies, ties among individuals are important; business is conducted in a group context; it’s important to keep conflict at a minimum; conformity and compromise help maintain harmony. Examples: China, Panama, Japan, and South Korea
27 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Typology of National CultureUncertainty avoidance refers to the extent to which people can tolerate risk and uncertainty in their livesHigh uncertainty avoidance societies create institutions to minimize risk and ensure security. Firms emphasize stable careers and regulate worker actions. Decisions are made slowly. Examples are Belgium, France, and JapanIn low uncertainty avoidance societies, managers are relatively entrepreneurial and comfortable with risk. Firms make decisions quickly. People are comfortable changing jobs. Examples are Ireland, Jamaica, and the U.S
28 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Typology of National CultureMasculinity versus femininity refers to a society’s orientation based on traditional male and female values.Masculine cultures value competitiveness, ambition, assertiveness, & the accumulation of wealth. Both men and women are assertive, focused on career and earning money. Examples are Australia and JapanFeminine cultures emphasize nurturing roles, interdependence among people, and caring for less fortunate people—for both men and women. Examples are Scandinavian countries, where welfare systems are highly developed and education is subsidized
29 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Typology of National CultureLong-term versus short-term orientation describes the degree to which people and organizations defer gratification to achieve long-term successLong-term orientation emphasizes a longer view of planning & living (years/decades vs. months). Examples are traditional Asian cultures (China, Japan, Singapore) where teachings of Confucius about discipline, hard work, & education are key valuesShort-term orientation is typical in the U.S. and most other Western countries
30 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Subjective Dimensions of CultureValues represent a person’s judgments about what is good or bad, acceptable or unacceptable, important or unimportant, and normal or abnormalAttitudes and preferences are developed based on values. They are similar to opinions, except that attitudes are often unconsciously held and may not have a rational basisExamples Values common to Japan, North America, and Northern Europe include hard work, punctuality, and wealth acquisition.
31 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Manners and CustomsManners and customs are present in eating habits, mealtimes, work hours & holidays, drinking & toasting, appropriate behavior at social gatherings (kissing, handshaking, bowing), gift-giving (complex), the role of women, & more.It is a mistake to minimize the importance of knowing customs of another culture, not simply b/c it could offend, but also because it can signal that you are not prepared & thus could be taken advantage of...Ways of behaving and conducting oneself in public and business situations
32 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Perceptions of TimeTime dictates expectations about planning, scheduling, profit streams, and what constitutes tardiness in arriving for work and meetingsMonochronic: A rigid orientation to time in which the individual is focused on schedules, punctuality, and time as a resource. Time is linear, and “time is money.” For example, people in the U.S. are hurried and impatientPolychronic: A flexible, non-linear orientation to time in which the individual takes a long-term perspective. Time is elastic, and long delays are tolerated before taking action. Punctuality is relatively unimportant. Relationships are valued. Examples are Africa, Latin America, and Asia
33 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 ReligionA system of common beliefs or attitudes regarding a being or system of thought that people consider sacred, divine, or the highest truth - & the associated moral values, traditions, & ritualsInfluences culture, and therefore business and consumer behavior.Example: The “Protestant work ethic” emphasizes hard work, individual achievement, and a sense that people can control their environment—the underpinnings for the development of capitalism. Islam’s holy book, the Qur’an, prohibits drinking alcohol, gambling, usury, and “immodest” exposure. The prohibitions affect firms dealing in various goods & services
34 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Language as a Key Dimension of CultureLanguage is the “mirror” or expression of culture; it is essential for communications and provides insights into cultureLinguistic proficiency is a great asset in international businessLanguage has both verbal and nonverbal components (i.e., facial expressions and gestures)There are nearly 7,000 active languages, including over 2,000 in both Africa and Asia
35 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Managerial Guidelines for Cross-Cultural SuccessAcquire factual and interpretive knowledge about the other culture; try to speak its languageAvoid cultural biasDevelop cross-cultural skills, such as perceptiveness, interpersonal skills, and adaptability
36 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Personality Traits for Cross-Cultural ProficiencyTolerance for ambiguity: Ability to tolerate uncertainty and lack of clarity in the thinking and actions of othersPerceptiveness: Ability to closely observe and comprehend subtle information in the speech and behavior of othersValuing personal relationships: Ability to appreciate personal relationships, often more important than achieving one-time goals or “winning” argumentsFlexibility and adaptability: Ability to be creative in devising innovative solutions, be open-minded about outcomes, and show “grace under pressure”
42 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 9. Ethics in international BusinessMoral principles and values that affect behavior of individuals, companies, and governmentsEthics tell us what’s right or wrongSometimes easier to understand than it is to actually put it in practiceAnd, sometimes easier to know what’s wrong than what’s right to do
43 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Inappropriate ConductCorruption is the abuse of power to achieve illegitimate personal gainBribery is common and can take the form of grease payments, small inducements intended to expedite decisions and transactions or gain favors
44 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 The Value of Ethical BehaviorEthical behavior is simply the right thing to do. It is often prescribed within laws and regulationsOften required by laws and regulationsEthical behavior is demanded by customers, governments, and the news media. Unethical firms risk attracting unwanted attentionEthical behavior is good business, leading to enhanced corporate image and selling prospects. Firms with strong reputations have an advantage when hiring and motivating employees, partnering, and dealing with foreign governments
45 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Variation in Ethical StandardsEthical standards vary from country to countryRelativism is the belief that ethical truths are not absolute but, rather, differ from group to group. This perspective is summarized by the phrase, “When in Rome, do as the Romans do.”Normativism is the belief that ethical behavioral standards are universal and that firms and individuals should seek to uphold them consistently around the world
46 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 An Ethical DilemmaImagine you are a manager visiting a factory owned by an affiliate in Colombia. During this you discover the use of child labor in the plantYou are told that without the income they receive from their children’s work, their families might go hungry. If the children are dismissed from the plant, they will likely turn to other income sources, including prostitution and street crimeWhat should you do? Raise the issue of the immorality of child labor or look the other way?
47 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Corporate Social ResponsibilityCorporate social responsibility: Manner of operating a business that meets or exceeds the ethical, legal, commercial, and public expectations of customers, shareholders, employees, and communitiesA strong CSR can:Help recruit and retain good employeesHelp differentiate the firm and enhance its brandsHelp cut costs, such as minimizing packaging, recycling, economizing on energy usage, and reducing waste in operationsHelp the firm avoid increased taxation, regulation, or other legal actions by local government authorities
48 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Corporate GovernanceCorporate Governance: The system of procedures and processes by which corporations are managed, directed, and controlledIt provides the means through which firms undertake ethical behaviors, CSR, and sustainabilityImplementing appropriate conduct is challenging for MNEs, especially when operating in many countriesA complicating factor is the use of third-party suppliers and contractors, some of which may behave badlyMost firms incorporate ethics and CSR into their mission, planning, strategy, and everyday operations
49 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Ethical Standards for Corporate Governance
50 INTERNATIONAL NEGOTIATION – UCL, JANUARY 2014 Questions?